Futures Slide As Iran Tensions Ease
Oil prices slid to an eight-month low as concerns about Iran subsided a bit.
Light, sweet crude for June delivery fell 91 cents to $91.66 a barrel in light trading, the lowest level since October 2011.
Traders and analysts said that a proposed deal between Iran and the International Atomic Energy Agency should ease tensions between the West and Iran's nuclear program. Iran had threatened to disrupt supplies if the European Union went ahead with sanctions over Tehran's projects.
Yukiya Amano, head of the IAEA, said he and Iran's chief nuclear negotiator said they had made a "decision" to reach an agreement allowing the U.N. agency to probe suspected attempts by Tehran to construct nuclear weapons.
But no agreement has been signed, with Amano saying it would happen "soon." He attributed the delay to unspecified "differences."
News of the possible agreement has been met with widespread skepticism. The White House said the U.S. would judge Iran by its actions, not its words.
"Let's face it, coming into the meeting, Iranians are going to say anything they can go avoid sanctions," said Peter Donovan, vice president and oil trader at Vantage Trading.
If progress is made to peacefully resolve the tensions over Iran's nuclear program, oil prices could drop below $90, Donovan added.
Also adding pressure are forecasts of a slowdown in the euro zone. The Organization for Economic Cooperation and Development forecast a 0.1% contraction this year for the single-currency area and growth of only 0.9% in 2013.
Oil futures prices have fallen 13% this year on worries that the euro-zone debt crisis would put the brakes on European growth--and slow economic expansion around the world. That could cut demand for crude and other commodities.
Still, the market was less than decisive about the news from either Iran or the euro zone.
"This is mixed, light-volume trade that really tells us very little," said Tim Evans, energy analyst at Citi Futures Prespective.
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